It's time to start learning Chinese. And fast. Has the prediction I made here two months ago, about China becoming the world's No.2 diamond consumer, become a reality so fast? Last week, Beijing reported that in 2009, despite the financial crisis, the country noted considerable diamond consumption growth, making it the second largest diamond market in the world, instead of Japan.
Being big in Japan, however, doesn't seem to be China's main concern: China's economic growth rate is skyrocketing, and its exports and domestic consumption rates are not far behind. The rest of the world is still reeling from the financial crisis, with modest 2-4% growth projections for the next few years, but China is predicting a 7-8% growth rate. Experts believe there is a good chance that China will become the world's primary financial power by 2030, dethroning the United States; and who knows – it may even happen sooner.
China isn't the only financial force to be reckoned with. India is also claiming a bigger and bigger piece of the global diamond and jewelry pie, and with the standard of living growing in near double-digit speed, the demand for jewelry in general, and diamond jewelry in particular, is spiking.
In the absence of a major political coup, the E-7 bloc of emerging economies and the G-7 group of industrialized nations are heading for a financial face-off – and we are looking at new financial empires 20-30 down the line.
The Chinese government, we learned last week, is subsidizing Chinese lessons for American students. The move is reminiscent of sending missionaries to the new world. Sounds like a step towards global domination to me.
At this point in time, China and the United States are codependent economies. While the US' Chinese trade deficit grows and its credit market is overrun by Chinese debtors, China's huge forex reserves hold mostly dollars and may have vast impact on the future value of the American currency.
And while I won't venture a guess as to Russia's global standing 20 years from now, I'm positive that Brazil is on its way to becoming a leading world power. Brasilia's economy has also noted an astounding growth in domestic consumption, exports and jewelry consumption, both by the locals and the country's massive tourism industry.
But what of other would-be empires? Germany – the fourth world power – is expected to see its economy and global standing steadily shrink by 2040, unless Berlin instates major immigration and market reforms and elasticizes its job market.
The UK, France and Italy are all expected to face the similar challenge of dealing with rapidly growing, competitive economies versus their own shrinking ones.
What do you think? Will China become the next financial empire? Or will India or Brazil claim the title? Are the financial powers of the present on their way to becoming the auxiliary markets of the future?
I'll be updating you on the issue, and would love to read your thoughts on the matter and what you perceive as the burning issues in this regard.
The article originally appeared in the IDI Blog
By: Roe Kalb
